Study Shows Global Poverty At Its Lowest Rate In History, And It’s All Thanks To Capitalism

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Capitalism gets a bad rap these days, often conjuring up images of greedy oil barons, sweatshop factories and polluted oceans, but a recent study shows exactly how much capitalism has helped the poorest of the world.

The study, conducted by Max Roser of the Institute for New Economic Thinking at Oxford University, shows that global poverty has declined dramatically over the last two centuries, with the sharpest declines coming just after industrialization began to take hold.

“In 1820 the vast majority of people lived in extreme poverty and only a tiny elite enjoyed higher standards of living,” Roser wrote in the report. “Economic growth over the last 200 years completely transformed our world and poverty fell continuously over the whole [two] last centuries.”

A graph showing the decline in global poverty over the last two centuries.

A graph showing the decline in global poverty over the last two centuries.

Roser calls it even more remarkable that this economic growth happened while, at the same time, the world’s population increased by seven times.

“In a world without economic growth an increase in the population would result into less and less income for everyone,” he wrote, “and a 7-fold increase would have surely resulted in a world in which everyone is extremely poor.”

But thanks to capitalism and industrialization, in a time of unprecedented population growth, mankind still managed to lift most of the world out of poverty. Even in 1981, more than half of the world lived in extreme poverty, but that number is now down to less than 20 percent– and it continues to fall.

In the present world, poverty is decreasing more rapidly than ever before, and it is happening in more places than ever before.

“In 1820 only few places in the world achieved economic growth – and only to a rather small extent,” Roser wrote. “The progress of the last 200 years was achieved as economic growth brought higher incomes to more and more people in the world.”

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Josh Fatzick